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tv   Power Lunch  CNBC  May 3, 2012 1:00pm-2:00pm EDT

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banks and this is a rather good valuation. >> that does it for us. don't forget to catch more "fast money" tonight at 5:00. you can always follow me on twitter. "power lunch" is going to be all over the markets today under a little bit of pressure after that ism nonmanufacturing report was disappointing ahead of tomorrow's jobs report. and keep an eye on green mountain. power begins now. halftime is over. "power lunch" and the second half of the trading day start right now. >> cameras are running across the floor because the hour of power begins right now. tyler mathisen here. sue herera at the new york stock exchange. she'll join us in just a minute. it is part of our theme once again today. it has been of course a great six months in the equity markets. the dow, the s&p and the nasdaq up 10%, 11%, 13%, stair steps there. look at these stocks. macy's, dollars tree, ingersoll, all up about 30% or more. but when will the music stop? and when will the brakes come
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on? nobody knows for sure, but there are some signs of a potential slowdown. we're seeing lots of earnings misses or forecast misses. we're calling it today the scareeconony. jeff has been reporting on this for the website and wrote a book about it "debt, deficits and demise." what's got you worried the most? >> i've got three concerns. number one, this mess in europe might have gotten swept under the carpet or kicked down the road a little bit, but it's still a mess. number two, these jobs numbers are looking very soft. the claims number better than expected today. still very concerned about it. number three, here's what's going on in washington right now. we have this fiscal cliff coming up. it's becoming -- it's a phrase investors are really going to have to get used to. scary things happening in washington. if they can't get this resolved, at the end of the year we could have a big problem on our hands.
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>> i want to drill back a little bit. michelle caruso-cabrera reported yesterday on the unemployment rate in spain something like 25%, youth unemployment better than 50%. that to me is a recipe for, one, social unrest. and when you look at the fisz sure that feels like the ultimate demise of the yur mean union. >> that's only a matter of time when that comes over here. whether it's the banks get hit or confidence gets hit, this is a problem for the kmern economy. what this is creating right now is a sense of unease and uncertainty. i've been writing about this term it was banded about in the early '90s as bad goldilocks. where the economy and recovery's not convincing enough for people to believe it but not bad enough to get people off the sidelines. that's what investors are looking for now. >> everybody tells me, jeff, you're actually a fun guy. >> i like to go out and have a good time. but truth is good.
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facing reality is good. we've been doing too much ducking reality. >> jeff, thanks very much. down to you, sue. >> he is indeed fun at a cocktail party. how do you play the downturn? steve grasso joins us and jeff kilburg, managing partner of kilburg capital. you just heard what jeff just talked about. let me talk to you, steve grasso, if at this point he is right, how do you protect yourself? what strategies should you employ right now especially in front of a key number right now? >> why wouldn't you just stick with the dividend payers, altria group. i know everyone says tobacco industry you still have headline risk there. but when you're yielding over 5% and the stock is right around this 52-week high, i think it's pretty much a safer way to play it. or dominion resource, utility company, that's the way i would go. >> would you use any options strategies in addition to that? >> my friends, brothers najarian would always help me with my options strategy. of course if you're protecting your long positions, you want to
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create some sort of revenue stream. so if you want to sell calls, you can do that as well. but the truth of the matter is i would go with your safety bets. let's see how these numbers clear out. let's just see what happens with this escalating market that everyone thinks the air should be coming out of sooner or later. >> all right. jeff kilburg, what would you do with your money right now to protect yourself? >> i like tlt, that's the etf off the 10-year note. it surely feels like they're going to come and grab these treasures if we have a bad number tomorrow. but like tyler was saying earlier, the political and cultural difference overseas is fearing people. that's where the scare tactic is coming out of. i want to play the euo. short the euro currency because, sue, at the end of the day i think they have to devalue that currency and bring it down to 120 to help pad the recession over there. >> yeah. i think you have a lot of company on that. steve, final word. >> you know, for the home gamer, look at the s&p, look at the s&p cash, 1386 is your 50-day moving average. all the professionals are
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watching that level. so even though we feel a little squishy here, until we break below 1386, that's where we run into a little bit of trouble. other than that, it's probably going to be a little bit of a buying opportunity. i would rather be short in this market. >> just wrote it down, 1386. back to you. >> commodities really on the move today. oil down more than 2% on the back of weak economic data and rising inventories. another big story is gold, down more than 1% today. and down 7% over the past six months. sharon epperson is at the nymex. sharon, specifically, what's going on with gold? >> well, it's a big story just as we're speaking we are hitting lows of the session right now down more than $20. and, tyler, traders are watching gold just like the rest of the commodities sector being impacted by this ism services data that was really taken as very weak here. as well as what you were talking to jeff about which is the slew of macro economic data coming out of europe that has been very weak. that's what traders are watching
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in this range between 1625 and 1675 that gold has been stuck in. back to you. >> sharon, thank you very much. gm's first quarter forecast driving well past street estimates. shares right now, well, they've been down about 30% over the past year and today they're down another 1.6% at $22.55. a far cry from that offering price not so long ago. phil lebeau is in detroit. phil. >> tyler thr, this is case where outlook is overshadowing results. first quarter nice results for jen motors. they beat the street top and bottom line. but outlook in north america the company saying it expects comparable results for second and third quarter. not a lot of growth there. the other concern, what's happening in europe. in the first quarter general motors lost more than quarter a billion dollars. on the conference call today ceo dan akerson said "we're
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confident in our plan. we're addressing internal industries but we're not immune to industry issues." as you look at shares of general motors continually under pressure, bottom line is europe is weighing on the stock right now, sue. and people want to see when europe gets fixed and when we have that next leg of growth. sue. >> phil, thank you very much. avon's former ceo re-elected to the company's board of directors at today's meeting. that move causing anger in some parts. that stock is down more than 35% in the past year. today alone it's down 0.3%. mary thompson joins us with more. >> plenty of frustrations if not outright anger from the few investors attending today's shareholder meeting. among them, the company's former chair and ceo david mitchell who is questioning why she's being allowed to stay on the board after stepping down as ceo back in december. >> andria young should not be there. i don't understand this board to have a lame duck ceo, so to
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speak, hanging around when her record over the past year is absolutely terrible. and yet she's still there i suppose training miss mccoy. >> the last five years marked by earnings misses, slowing sales in key markets like brazil and russia and a 51% decline in the company's market cap. avon's been entitled in a costly probe regarding bribery. to make a $10 billion bid for the company one avon rejected as being too cheap. she told shareholders today it was time for the firm with new coming in. jung says she will continue to try to get it back on track. they wonder why the woman that derailed the company in the first place is still at the helm. back to you. >> thank you very much, mary thompson. while the nation's retailers reporting sales figures and overall coming in a bit below expectations despite the sector hitting a new high on a stock basis.
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the s&p retail index is up 20% in six months. down today by about 0.75%. courtney reagan, you're up to bat. >> that's right. mall madness. same store sales stole some of april's steam. a number of retailers still disappointed breaking their own strong sales trends. take a look at costco. largely impacted by fluctuating gas prices and foreign currency, up 4% but below expectations and lowest month of growth since december of 2010. target same store sales up 1.1%. but disappointing apparel sales put that below consensus. macy's up 1.2%, but the weakest year over year growth in 13 months. in general the barbell market continues. on the high end saks posting a gain of 2%, but below expectations again. nordstrom, one of the strongest in the month up 7.1%. and discounters, tjx and ross stories as you can see down here below both beating with some decent numbers. it is a dicey day in retail, but many analysts think april was simply an off month and not
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indicative of a downward trend. look at macy's. shares already shaking off earlier losses trading instead on fundamentals of that company. and kohl's actually up 1.5%. the average analyst price target is about 11% above where we're currently trading right now, 51.46. >> courtney, thank you. shares of herbalife down. another 8.5%. but the knew tragsal supplement maker is trying to stop the bleeding repurchasing 427 million of its shares. now, two days ago as you probably recall, the stock got totally whacked after the short seller, david einhorn, questioned the company's disclosure policy and where the sales were actually being logged. after a solid run up to $73 a share, the stock is down more than 8% over the past -- or this year and about 5.5% over the one-year period. let's go to jeff kilburg now who
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has been following this story. the company came out with some statements today, did they stop the bleeding? what would you do if you owned the stock? do you see this as a chance to buy it cheap? >> well, ty, kudos to herb greenberg. he's been all over this like a cheap suit. i'm not saying, herb, that you're wearing a cheap suit. nonetheless seeing a 35% move down here. i cannot catch this falling knife. david einhorn is a formidable opponent. and when there's smoke, there's fire. i think there's more room to run on the downside as this story develops. >> all right. thanks very much, jeff. appreciate it. sue. >> ty, to washington now. and a fascinating look inside the mind of osama bin laden, the man who targeted the area where i am standing right now. it comes in newly released documents taken from his compound. and eamon javers has been looking through them. and, eamon, some fascinating details here. >> hi, sue. it really gives you a picture of just what osama bin laden and his top lieutenants were thinking in their final days. the documents being released
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today. a cash of them from west point's combatting terrorism center. it gives us a sense of what their thinking was particularly on the economy. as we look through these documents this morning we see they're focused again and again on the impact of the financial crisis and its impact on the united states and nato's ability to fight and project power overseas. they're also looking at the impact on the economy on the obama administration and watching so carefully as to even look at the number of questions on given topics that reporters asked the president at press conferences. take a look at one of these documents here and you'll see al qaeda's thoughts on the media and obama administration. one of the documents reading not one of the journalists dared to embarrass obama by questioning him about the influence on the american budget and the national economy of spending the billions yearly on the two wars of afghanistan and iraq. that's a statement apparently written by al qaeda's american member. and then this one caught my eye in particular. thoughts from him on the irish
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of all people. he wrote in a document what helps to prepare the message was the latest economic crisis that affected ireland a lot thus forcing its youth to look for sources of living on the outside. the other matter is the increasing anger in ireland toward the catholic church. so at least one member of al qaeda thought they might be able to generate some recruits in ireland. tyler, back to you. >> thank you very much, eamon. our chief international correspondent, michelle caruso-cabrera, has been looking at the documents as well. but through a slightly different prism. michelle, welcome. some of these documents make al qaeda seem like a business. >> yeah. it's surreal to read through them because they have very frank-like business discussions about what is a horrific topic, terrorism. let me give you an example, tyler. let's set the stage. the september 11th attacks happened. and in the eyes of jihadists around the world, they were successful. now osama bin laden and his group find there are other groups that want to join al qaeda. they want to adopt the al qaeda brand as a way to bolster their standing.
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so quite literally within his group there are discussions that are the equivalent to franchise or not to franchise. so there's a letter where you see someone saying i don't think we should allow these other groups in. we should distance ourselves due to what you would call a lack of quality control. we can't control them. we don't know what they're going to do. another individual says, yes, we should bring them into the group for growth and expansion. bin laden ultimately decides he wants to like loose jv association, he's going to offer advice, no formal unity. tyler, he eventually grows to decide that that was not a good idea because the years go by and indeed that's exactly what happens. they have lack of control of a lot of these other groups. he doesn't like their messaging, he doesn't like their branding. now he wants to issue a letter of understanding, a letter of memorandum where they all agree to follow his principles. he wants all p.r. releases to go through him first. and he also wants promotions to go through him first. for example, it says if the brothers in any territory deem to elevate the position of any
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of the brothers to a position of importance, such as first deputy or second deputy, then that should be done in consultation with the central group, in other words him. and then he goes onto say that is what the stipulation that the cv of the brothers nominated to the position is sent, particularly to him. so a lot of discussions there where they're really trying to fund an international operation that he is struggling to control, tyler, with a horrific mission of course. >> fascinating glimpse into how that organization operated under bin laden and presumably still operates today. michelle, thank you. an option once set aside for the wealthy is now open for your money. but do you want in? that's next. plus, a real estate market that could be ripe for the picking. prices still lagging. is the door open for opportunity? diana olick will take us there. and "the scream" record price last night at sotherby's. coming up, other hard
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shares of the carlyle group getting somewhat of a tepid reaction on first day of trading. let's look at where the stock stands right now. kayla tausche is here to help us go through this. up about 5 cents right now. kayla, what's going on? >> as far as the way this is trading, it's definitely not a surprise at least in either direction. the company matched the price to exactly what investors had wanted.
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a very strategically priced deal in order to guarantee some money managers who have lost money on the ipo of oak tree capital guaranteeing they won't see the same thing happen again. these alternative asset managers are a combination of companies, funds of funds, real estate investing and private equity probably the latter of which they're best known for, carlyle alone has owned dunkin brands and makes when the deal market is healthy. ipo followed a successful debut for industrial company allison transmission. when your business model is a reflection of the overall economy, expect some volatility there. back to you. >> kayla, thank you very much. jeff kilburg back with us as we think about how to play the private equity and money management companies. we're looking at an array of them here from apollo to blackstone, black rock, kkr and finally carlyle. these guys have struggled generally speaking. which do you like best and least? >> pretty interesting cross section. blackstone came to the market first. they had a nice price up around
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$38. they've suffered the most. however, with carlyle today there's a lot of moving parts because each one a different entity. blackrock -- >> it's a money management company. >> they are. but at the end of the day blk is something you need in your portfolio. the management there, the leadership, i think those guys and gals are great over there. and i think blk is the favorite by far. i don't know enough about apollo, but they've kind of been a laggard here, so i'm kind of down on apollo, but i'm all in on blk, blackrock. >> biggest asset manager in the world. >> just getting bigger, ty. >> jeff, thanks very much. sue. >> ty, up next, forbes' top venture capitalists, 80% of them all came from one school. and it ain't harvard. stay tuned for that one. and wait until you hear what michael dell tweeted today. more "power lunch" coming up in two minutes' time.
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second markets transactions. drop box and box.net. so last quarter software surpassed the category that facebook is part of, consumer web and social media which comprised 44% of trades. we don't know how much volume has dropped since then, last quarter second market completed $165 million in trades up from $115 million a year earlier. what do investors think is the next facebook? >> pinterest is the top rising star with almost 700% increase in the number of people watching the company from the prior quarter. also on the hot company's list, online eye glaz company warby parker, strike media, software platform service now and software development service global logic. now second market is hoping to drive trades in start-ups like pinterest as well as private bank shares and alternative assets like wine, art and diamonds. tyler, we'll have to see if they draw as much interest as facebook did. >> julia, thank you very much.
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forbes' midas list has one thing in common, stanford university. four of the five top ones are alumba alums. jim briar thanks in part to an early $13 million facebook bet, 11% stake makes the second largest shareholder in that company behind you know who, mark zuckerberg. and with his own 1% stake, br g breyer. and number two marc an dreesen and he bet big on twitter as well. next three is gray lock's reid hoffman. found of linkedin and angel investor to 80 start-ups. also on the list. david sze. one of the first guys in the valley to see the potential of social media.
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and benchmark peter feinton comes in at number five. he's a yelp board member. speaking of start-up success, remember michael dell? he tweeted this morning 28 years ago with $1,000 instead of studying for finals during my freshman year at the university of texas, i started dell. good move for mr. dell. word to my son who starts his finals today at temple university, don't get any ideas. >> i think that's very good advice, ty, for a lot of people. we have an enormous amount coming up in the next half hour on power. we're going to take you to a real estate market that could be ripe for the picking. and even if you don't want to move, this could be a great place for you fo park some extra cash. a lot happening at the nymex today. selloff in gold, busy day for oil as well. the countdown is on. we'll take you to the floor next.
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welcome back to "power lunch." i'm brian shactman here at the markets desk where i'm looking at krint yan college coco, pretty disappointing earnings.
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what went on the conference call now lows of the session down more than 20%. basically disappointed with guidance and they don't see enrollment growth at all moving forward. sue, back to you. >> brian, thank you very much. selloff in the metals markets today. specifically gold. sharon epperson is tracking the action at the nymex as we go into the close. did they manage to pair the losses or no, sharon? >> not at all here, sue. we are still near the bottom end of the range we've been in today down about $20 or so. there are really about three reasons we're seeing these low prices here in gold and the selloff across the board in the metals market. and the first one of course is the data that we've been getting all week from europe, which has been pretty weak. and then on top of that, look at the adp data here in the u.s. the services data that we got here today, that is a contributing factor. a lot of people very skeptical about what we're going to see in the nonfarm payrolls data. but then add to that the money traders here on the floor confused by a new cme rule on margins and exactly what kind of
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impact that could have on them moving out of some commodities or all commodities for the moment until they try to figure it out. >> i can't blame them at all given that. thank you, sharon, very much. >> sure. >> let's get to the trading action here. bob pisani joins us on the floor. you know, sharon mentioned the selloff in the metals markets, oil also selling off as well and you say energy stocks are underperforming. >> i'm a little worried because this is a major component, tech, financials, energies, the big three that's out there and it's been notably underperforming now really for a couple months, but it's been accelerating in the last few days. we've had a few high profile misses. apache missed. murphy missed. these are big exploration and production companies. devon missed yesterday. it's down again. transocean which is in the equipment area, big rig outfit, they missed, but the stock is trading up. i'm worried about the influence chesapeake energy is having on the group as a whole. of course some of the problems are the company's own problems
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with the ceo, but investor confidence is fragile. if they figure this is too complex, we don't understand a lot of this stuff, let's just stay away from the group as a whole, you get influence here. put up the chart again because ever since oil hit a peak, and i'm referring to what sharon talking about on oil, back february, beginning of march, that's your green line, energy stocks have been dramatically underperforming the rest of the market and now that's accelerating in the last three days. >> down 3.3% today alone. to the nasdaq now and seema mody. hi, seema. >> start with retail. couple of the winners, whole foods hitting the ball out of the park. zumiez raising guidance. switch over to tech though. the best performing stock on the s&p tech index is teradata company reports wowing investors. >> thanks, seema.
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rick santelli is now at the cme with the latest on the bond market. and there's a lot of handicapping goipg on on what to expect for tomorrow's number, rick, right? >> absolutely. and traders are definitely handicapped due to all the uncertainty in the air that we continually speak to on cnbc. if you look at an intraday and year date of 10s, you can see we're a bit lower. look at intraday we're hovering at a fresh three-month closing. look at the bund closed up from their historic all-time year close 160 basis points. spanish auctionings, they went great except for the fact you paid up for the financing. last chart is euro currency. not highly unchanged from where it's been heading. back to you. >> rick, thanks very much. you're going to stay with us and we're going to bring in steve liesman because we're going to talk about something here very provocative said in a column by
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david einhorn. setting his sights not on herbalife but on ben bernanke. einhorn blasting bernanke and the fed over its low interest rate policy likening it to eating jelly donut after jelly donut after jelly donut. he says chairman bernanke is presently force feeding us what seems like the 36th jelly donut of easy money and wondering why it isn't giving us energy or making us feel better. einhorn, does he have a point? steve, what do you say? i read this article too. if nothing else, he really does make you think. >> definitely makes you think. but makes me think that he doesn't have a good beat on monetary policy. i think he's gone astray in several places. the first is that he ignores a lot of things going on out there. he has a misconception of who the savers are in this economy and who the spenders are. who the leveraged are and the unleveraged are. what he wants to do is raise interest rates to the 3% range. and he says that will get us to
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do investment, which by the way we've had pretty good investment in the last year. second of all, he says this will give more money to savers, but the problem is that savers don't have a high margin propensity to consume. to keep rates low and prompt those to get out and spend and those borrow and deleverage to work out from under their leverage. the idea that fed policy is the problem, i think einhorn should be looking elsewhere. >> rick santelli. >> welcome to my side, david einhorn. i've been saying this since february of '09. we need to raise rates. we need to make the capital markets be interesting and profitable for some of these small banks. his first premise in the first paragraph ben bernanke doesn't understand human nature, i agree with. and towards the end he makes another assumption i've been hammering home and that is ben bernanke is protecting and doing most of these programs for banks and corporate america. i'm not saying that isn't somewhat necessary, but at the expense of households.
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and he even goes that deflation should never be the boogy man unless it's deflating wages. think apple computers and price drops. why is that a bad thing? >> that's one of the more absurd things he says. the idea we can have prices falling and not have wages falling is exactly what bernanke's trying to avoid. >> tell that to an apple stockholder. tell that to an apple stockholder. >> rick, it's got nothing to do with that. >> oh, yes, it is. >> what does it have to do with? deflation fear is -- >> there's productivity and positive factor -- >> that's why inflation fell. that's why inflation fell. not because the economy was -- >> i'm not talking about inflation. i'm talking products. >> because you're ignoring facts, rick santelli. >> the other thing is he's fighting the last war. all of his analogies in the speech is about the depression. that was a long time ago. it's a different world, mr. ben bernanke. >> all right, gentlemen -- >> falling prices and falling wages. that will be people's standard of living declining. >> gentlemen, thank you very
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much. we'll leave it there for now. mortgage rates talking about where interest rates are hitting new lows. according to freddie mac, the 30-year fixed now averaging 3.84% beating the previous all-time low back in february. and this is the prime house buying season. so is it a good time to buy? you may want to check out atlanta. it is a disaster in housing that is suddenly making a comeback. our diana olick joins us from atlanta on where and how to get in and when. diana. >> that's right, tyler. they're calling atlanta the phoenix of the east. much of the housing market here in severe distress. but is it really all that bad, or does it present a huge opportunity? take a look at the numbers if you will. home prices in atlanta down 17% annually on the s&p sheller home index. compare that to other cities that were like atlanta, that is they didn't see the huge boom and bust during the crash. now their house prices are stabilizing, not so much here. so what happened? 25% of the jobs lost in atlanta
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during the recession were real estate-related. that is sales, mortgages, construction. whereas 100,000 people moved here in 2006, just 17,000 did in 2009 that according to the census. foreclosures surged with now a full year supply of bank-owned homes, according to realty track, so why is now the time to get in? home prices are now half -- half of replacement costs. and atlanta is getting back on its feet. >> we just generated 68,000 jobs between january 11 and january 12. the strongest growth in five years. so when you add great quality of life, job growth and a strong population growth, you have a formula. >> we always do brand new appliances. >> this is the granite? >> the granite was great. >> bruce carlisle buys and sells foreclosed homes to investors. he rehabs them first and he says the market is full of these
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properties. and full of investors from canada, venezuela, singapore, malaysia, many with cash. but many are taking advantage of those low mortgage rates and helping to put a floor on prices at the low end. now, tyler, one thing though is that he's saying a lot of atlantans aren't able to get in on the market because their credit is so trashed. survey found atlanta had the worst credit rating of everyone. >> diana, thank you very much. to brian shactman now with a market flash. >> i was just talking -- my wife just e-mailed me and said she saw lobster bake on groupon should we do it? i see the stock and lock up yesterday but getting hit hard today below $10 just a few minutes ago for the first time since its ipo, hit a low of 9.93. keep an eye on shares after that. second day after the lockup expired getting hit twice as hard. mosaic midday upgrade to a buy price target of $65. it's definitely bouncing off of its lows of the day.
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sue, to you. >> brian, thank you very much. other big headlines out today, cable vision shares getting slammed. the cable provider beating estimates but its revenue fell short. beam trading at levels not seen since december of '07. bourbon maker easily beating bottom line estimates. and spirit raising fees again for carry-on bags now jumping to $100 for passengers who wait to pay for bags at the boarding gate. spirit currently charges $45 for any carry-on in an overhead compartment. yikes. up next on "power lunch," you saw it here first last week. edvard munch's famous painting "the scream." we have some other hard asset ideas coming up for you.
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coming up on "street signs" at the top of the hour, green mountain coffee really falling off a cliff. herb has been warning us all the way down. how do you avoid the big miss? we're going to run down the red flags the pros look out for. and the cursed cousins shares a company and similar businesses to one's current record highs. are they a buying opportunity? and what's going to give you the best return on your money in this market? stock picking or index players. we're going to put that question to a guy who looks after $160 billion. now back to you guys on "power lunch." thank you very much, mandy. hillary clinton and tim geithner both in china for key meetings about the entire missions that overshadowed by drama revolving around a blind chinese human activist. after escaping chen guangcheng
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was rushed. there's a lot of question about how the u.s. handled the incident as he left production. john harwood is live in washington with some of the fallout. it's a story that continues to unfold, john. >> there's no question about it. and yesterday, sue, we had thought initially that the u.s. diplomats had smoothly handled the situation to pave the way for the strategic and economic dialogue which begins today with secretary clinton and tim geithner. as it happens it got very messy once chen guangcheng left the custody of u.s. diplomats, he seemed to have a change of heart. he told our colleague from cnbc in beijing that he thought when he decided to leave the embassy that his family was going to be safe. subsequently he has come to the conclusion, and his family has, that they're not safe. now he says he wants to leave and go for medical treatment in the united states. it's a very challenging situation. the united states is still trying to keep the temperature down as they did initially.
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and the hope is that this is not going to interfere with this dialogue. i talked to nick lard di from the peterson institute of international economics, he said that so far over the last several years this dialogue initiated by the bush administration has been successful. here he is. >> they've moved on their currency probably partly as a result of extended discussion of that topic. we've had some perhaps modest but some improvements in the protection of intellectual property in china. a lot of these issues remain works in progress, but i think the strategic and economic dialogue has advanced the agenda on balance. >> so, sue and tyler, the administration is hoping they can keep advancing the agenda, but this incident is threatening to overshadow that. and sort of derail whatever further progress. they hadn't expected a lot of big new concrete developments at this session, but simply trying to keep the positive developments moving. >> john, thank you very much. turning now to sotherby's.
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it made art history last night where last-minute furious battling over two bidders edvard munch's "the scream," most expensive sold at auction. take a listen. >> let's sell it then. say i love you at $106 million. so it's one-six. $107 million. $107 million his bid against you, i shall sell it then for the historic sum at $107 million, hammer. sold. thank you, charlie. >> on the phone now, sotherby's simon shaw. he said $107 million, is that
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commission? >> yes. that's right. the hammer bid was $107 million in the room, which with the premium makes $119.9 and that's significant because it's the first time a hammer bid has ever exceeded $100 million. i believe the previous record was about $95 million. >> what's the next big piece that could come to auction in the world? >> well, we have actually next week our contemporary art sales at sotherby's in new york where we've got a tremendous group of three works from the post war period. a liechtenstein sleeping girl, one of his most iconic pieces and bacon and double by andy warhall. >> how long did it take last night? >> about 12 minutes. we just heard the end part of it on your segment there. it was a very, very exciting sequence. bidding starts about $40 million. you had a flurry of hands thrust up into the air from all parts
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of the room. it really felt like there was a whole united nations of bidding. but the last section was this intense dog fight between two telephone bidders that took it up to 107. >> thank you very much, simon. of course you're not talking about who's the buyer. we'll have to find that out through the old fashioned way dogged reporting. simon, thank you. if you're looking to add some hard assets -- we're going to interrupt right now and go for a market flash to brian. >> listen, it's make my trip limited. it's travel services company deals with india and the u.s. according to jet airways and indigo back on their site selling tickets through makemytrip. went from negative to positive. off of the highs but a definite "power lunch" pop for makemytrip. >> thank you very much. they had me move because i was standing in the wrong place here with the hard assets. you can imagine why. there. right there. if you're looking to add some hard assets aside from fine art,
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here's a couple alternative and very profitable investments. fine and rare wines. where are you? they're back over here now. especially award winning ones from france. they have increased the most in the past year. there's a rioja. i don't think that's from france. who knows. particularly topped bordeaux and burgundy like a 2005, one of the greatest crop years of recent times now sells for $174,000 a case. 60% more than its original 2009 price of $110,000. the hollywood reporter says new avengers movies has driven the prices for vintage comic books to new records including iron man's fetching $375,000. he lives, he walks, he conquers. that's double estimates. other collectors turning to bling for some ca-ching in their portfolios. diamonds, rubies, golds, gems, they're almost recession proof.
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next on "power lunch," herbalife shares slammed after concerns over business practices and accounting. at the same time the ceo gets a $90 million pay package. what is wrong with this picture, if anything? we'll debate it when we come back. [ male announcer ] if you believe the mayan calendar, on december 21st polar shifts will reverse the earth's gravitational pull and hurtle us all into space. which would render retirement planning unnecessary. but say the sun rises on december 22nd, and you still need to retire. td ameritrade's investment consultants
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herbalife under scrutiny this week and first up in our power rundown. with us to run things down, bob pisani and cindy, news editor for cnbc.com and author of the pony blog. welcome to both of you. start with herbalife shares plummeting after david einhorn raising questions about the company's practices. this is the same company that gave the ceo, michael johnson, nearly $90 million in compensation last year. leading some to wonder whether or not there is a disconnect. ladies first. the stock's been a great performer the last couple years. >> you have to look at the numbers. first of all the earnings of this company have doubled in the last four years. second of all, only a small portion of this compensation actually came from basal ri. the rest was him cashing in on stock options, which you know that value is shared with shareholders. so i think the only question you do need to ask is why did he cash in so much now?
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>> right. exactly. bob, transparency is the keyword here, right? >> yeah. i don't know if i have such a big problem with mr. johnson as i do in general with ceo pay. ceo pay was 40 times a worker in 1980, it's ten times compare today what it was to a worker in 1980. that really sticks in the krau of america. i think that's a problem. >> let's move onto shopping. one of my favorite topics. target and costco reporting same store sales, a fluke or trouble in big box land. what do you think, bob? >> it's not target and costco. they had great numbers. just because they were off by 1%, i don't think that's a problem. we just had a weird month. a lot of the retailers reported some odd numbers. i think we got to wait until may, but i wouldn't say big box guys are in trouble. no. >> cindy, i don't think you think they're in trouble either. >> no. go to my target, my costco, it looks like they're giving stuff
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away. i think it's hard to make predictions in this kind of a clun ki recovery. we're a consumer nation at the end of the day. you have to figure there's only so long we can go before we start to spend more on discretionary items and both of these retailers have a good mix of both the staples, which carried us through the recession and carried them through the recession and the discretionary stuff we're going to start buying. i have my eye on an umbrella for my deck. >> good for you, my dear. all right. you can file this under the really big mac. mcdonlds's under fire for building an olympic size restaurant for the london olympics. it's a two-story cathedral-like restaurant that will seat up to 1,500 people. cindy, right or wrong? it doesn't feel right, but, you know. >> you know, it doesn't feel right in the sense that we are very critical, particularly with the collective weight gain in many parts of the developed world. but look at the end of the day if you're mcdonald's, you can't miss this. first of all the athletes, two words, michael phelps, right, he ate his way through the mcdonald's menu and won eight
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medals in beijing. the athletes love it because they burn it like fuel. the spectators and people at home watching and frankly i don't want a corporation telling me what my kid should eat or not eat. i think that's up to a parent to decide. you get into a sticky situation there. as a company they're doing the exact right thing be being where they need to be. >> europeans are eating their way through mcdonald's and other things and getting heavier along with the rest of the world. >> that's true. >> i think i agree with you on this. they've been around since 1976 as an olympic sponsor. there are fruit plates and salads on that menu, i hope it will be there in the olympic village, sue. >> and oatmeal. thanks, guys, appreciate it. we're going to switch to auto stocks. are they finally ready to turn the corner after a year stuck in park? that's coming up on cnbc's "power lunch."
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all right. ahead of a jobs report tomorrow, nobody wants to be in this market. the dow jones industrial average is down 77 points, the nasdaq down 37 points, better than 1%. and the s&p 500 is down better than 11 points. ty. >> sue, thank you very much. jeff kilburg, what do you have your eye on right now? >> well, ty, we just saw a recent move in the equity markets. i think traders right now are real

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